Making the PR Case for PE

September 6, 2019

By Jeremy Milner

Many years ago, I kissed my grandmother on the cheek and told her how nice it was to see her. She replied, “You’re such a PR guy.” I wasn’t sure I should take her remark as a compliment, but quickly realized she was right either way. I mention this to be clear about my complete and unwavering bias when it comes to why private equity firms (or anyone really) should engage the services of an outside PR firm.

While it doesn’t happen overnight, an integrated communications plan can improve the quality of and boost deal flow; it can help strengthen LP relationships and aid in fundraising; and it also supports efforts in other areas, from recruiting to portfolio-company communications.

The answer is NOT because it guarantees front-page coverage in the Wall Street Journal, necessarily, but rather because the landscape has evolved considerably over the past two decades. No longer is PE a cottage industry in which a lone rainmaker can deliver top-quartile performance on their own. It has become a mature asset class in which the best performing funds aren’t just characterized by a strategy delivering a material investment edge, but by those who can articulate and showcase their competitive advantage to the broader market.

Business owners, for instance, want to understand the value-creation capabilities of prospective buyers. Investment bankers, in formulating a process, want to ensure only the most relevant acquirers are invited to the bidding. When it comes time to exit, too, seller credibility matters, particularly in sponsor-to-sponsor transactions. And while LPs prioritize returns first and foremost, GP reputations will certainly inform whether investors believe past performance can be repeated and can add color around “how” and “why” past funds performed the way they did.

A sustained public relations effort, as a result, can lead to better brand recognition across the broader PE ecosystem and while it doesn’t happen overnight, an integrated communications plan can improve the quality of and boost deal flow; it can help strengthen LP relationships and aid in fundraising; and it also supports efforts in other areas, from recruiting to portfolio-company communications.

The catch, particularly in the middle market, is that it’s hard for most firms to do this on their own. They usually lack the people, the bandwidth, the knowledge of the process and best practices, and the media relationships to be successful. When looked at in the context of the current private equity landscape, along with the increasing challenges facing those seeking media attention, making the case for retaining the services of an outside PR firm becomes a lot clearer.

#1 – Competition Continues to Grow

An increasing number of PE firms and a growing number of funds (see below) escalates the competition, not just for deal flow, but brand awareness as well. McKinsey estimated last year that available dry powder had reached $1.8 trillion, which exceeds the GDP of some G7 countries and the GDP of most countries in the G20. It just adds dimension to the perpetual complaint in PE that there is too much money chasing after too few deals.

This is why getting on the short list of investment banks for deals should be on sponsors’ short list of priorities. The right PR strategy can help do just that. Ten years ago, it was enough for sponsors to identify areas of specialization, be it specific sectors or verticals or even a specific niche, such as working with founders or helping orchestrate carveout transactions. Today, it’s not enough to say this is what you do. Sponsors must demonstrate their capabilities and then ensure they’re conveying these messages to the right audience, continually and constantly.

 

#2 – Relationships Still Matter

Fewer publications, fewer reporters, and a plethora of PR folks (see below) also means increasing competition for “mindshare” with industry media. A PR firm with an industry-specific focus (take private equity, for example) and, more importantly, strong relationships with the trade press (private equity works here too) simply helps cut through the noise. Many PR folks were reporters in a previous life, and those that weren’t learn quickly what will fly and what won’t.

One of the best references I ever got was from a reporter with whom I had developed a strong long-term working relationship. When asked what my biggest strength was, she replied, “Jeremy doesn’t pitch [garbage],” This was an important, appreciated, and telling comment. It’s also something I’ve never forgotten. While it may seem like a low bar, it has stuck with me as an important way to differentiate myself and my clients. It’s also not as low as some might assume, because it requires PR professionals to speak truth to power. If a pitch won’t resonate to members of the fourth estate, a good PR professional should push back to challenge executives and reframe the desired message so it does.

#3 – All Hands on Deck

An ongoing integrated public relations and marketing plan can take many forms. While the time and investment necessary for success can seem questionable, the answers are quite clear.

Most middle-market PE firms we work with have one full-time associate assigned to assist with PR/Marketing, along with a managing director or partner who is often counted on as the primary spokesperson. When reviewing the daily list of tactics we’re implementing for PE firms, there is no doubt it’s more economical, with better results, to supplement this structure using an outside firm. The experience, strategic assistance and many hands of your PR firm should be an extension of your existing team.

Whether it’s media relations, thought leadership content creation, newsletters, webinars, speaking opportunities, award submissions, or social media, the many hands of an outside agency are invaluable in delivering a consistent message that builds momentum over time. It’s requires creating awareness, building brands, highlighting successes, and ensuring an ongoing stream of communications can tell a story that keeps the firm top of mind, and more importantly, on the short list.